Icai Study Material MCQS: Be Chargeable To Tax

CA Kishan Kumar MCQs – Capital gain May/Nov 2020
ICAI Study Material MCQs
1. Which of the following would be regarded as transfer?
a) transfer of a capital asset in a scheme of reverse mortgage

b) transfer of a capital asset under a gift or will or an irrevocable trust
c) transfer by way of conversion of equity shares from preference shares
d) Redemption of Zero-coupon bond
2. Short-term capital gains arising on transfer of listed shares on which STT is paid at the time of transfer, would
be chargeable to tax _____________________.
a) at the rate of 10%

b) at the rate of 20%
c) at the rate of 15%
d) at the rate of 5%
3. Distribution of assets at the time of liquidation of a company ________________________.
a) is not a transfer in the hands of the company or the shareholders.

b) is not a transfer in the hands of the company but capital gains is chargeable to tax on such distribution in
the hands of the share holders
c) is not a transfer in the hands of the shareholders but capital gains is chargeable to tax on such distribution
in the hands of the company
d) is a transfer both in the hands of shareholders and company
4. Land or building would be long-term capital asset only if it is __________________.
a) held for more than 12 months immediately preceding the date of transfer
b) held for more than 24 months immediately preceding the date of transfer
c) held for more than 30 months immediately preceding the date of transfer
d) held for more than 36 months immediately preceding the date of transfer
5. Capital gain on transfer of depreciable asset would be ________________.
a) long term capital gain, if held for more than 36 months

b) long term capital gain, if held for more than 24 months
c) long term capital gain, if held for more than 12 months
d) short term capital gain, irrespective of the period of holding
6. For an Assessee, who is a salaried employee who invests in equity shares, what is the benefit available in respect
of securities transaction tax paid by him on sale and acquisition of 100 listed shares of X Ltd. which has been
held by him for 14 months before sale?
a) Rebate under section 88E is allowable in respect of securities transaction tax paid
b) Securitiestransactiontaxpaidistreatedasexpensesoftransferanddeducted from sale consideration.
c) Capital gains is taxable at concessional rate of 10% on such capital gains exceeding 1,00,000
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d) Capital gains is taxable at concessional rate of 15%.
7. Under section 50C, the guideline value for stamp duty is taken as the full value of consideration only if
________________________.
a) the asset transferred is building and the actual consideration is less than the guideline value
b) the asset transferred is either land or building or both and guideline value exceeds the actual consideration
c) the asset transferred is either land or building or both and the guideline value exceeds 105% of the actual
consideration
d) the asset transferred is land and the actual consideration is less than the guideline value
8. Where there is a transfer of a capital asset by a partner to the firm by way of capital contribution or otherwise,
the consideration would be taken as ___________________.
a) The market value of the capital asset on the date of transfer

b) The cost less notional depreciation of the capital asset
c) The value of the asset recorded in the books of the firm.
d) Any of the above, at the option of the Assessee
9. Under section 54F, capital gains are exempted if _____________________.
a) LTCG arising on transfer of residential house is invested in acquisition of one residential house situated in
or outside India
b) LTCG arising on transfer of a capital asset other than a residential house is invested in acquisition of one
residential house situated in or outside India
c) net sale consideration on transfer of a capital asset other than a residential house is invested in acquisition
of one residential house situated in India
d) short term or long-term capital gain arising on transfer of a capital asset other than a residential house is
invested in acquisition of one residential house situated in India
10. Under section 54EC, capital gains are exempted if invested in the bonds issued by NHAI and RECL or other
notified bonds ______________________.
a) within a period of 6 months from the date of transfer of the asset

b) within a period of 6 months from the end of the relevant previous year
c) within a period of 6 months from the end of the previous year or the due date for filing the return of income
under section 139(1), whichever is earlier
d) At any time before the end of the relevant previous year.
ICAI Sample MCQs
11. Ashok took possession of property on 31 st August 2019 booked by him three years back at Rs. 25 lakhs, The
Stamp Duty Value (SDV) of the property as on 31 st August 2019 was Rs. 31 lakhs and on date of booking it was
Rs. 29 lakhs. He had paid Rs. 2 lakhs by A/c payee cheque as down payment on date of booking. Which of the
following will be considered as income, if any, and in which previous year?
a) Rs. 4 lakhs in P.Y. 2019-20

b) Rs. 4 lakhs in P.Y. 2016-17
c) Rs. 6 lakhs in P.Y. 2019-20
d) No income shall be taxable, since down payment was paid by A/c cheque while booking the property
12. Unexhausted basic exemption limit, if any, of a non-resident for A.Y. 2019-20 can be adjusted against
___________________.
a) Only LTCG taxable @ 20%

b) Only STCG taxable @ 15%
c) Both (a) and (b)
d) Neither (a) nor (b)
13. Mr. B acquires 1000 equity shares on 01.01.2017 at Rs. 200. The Fair Market Value of the said shares on
31.01.2019 is Rs. 500. Mr. B sells the said shares on 30.04.2019 at Rs. 400. Calculate the amount of capital gain
in the hands of Mr. B, assuming that securities transaction tax has been paid by Mr. B on acquisition and transfer
of the said equity shares.
a) Nil
b) (-) Rs. 1,00,000
c) Rs. 2,00,000
d) Rs. 3,00,000
14. Maya had bought 3,000 STT paid listed shares of a company on 25.02.2019 at Rs. 300 per share. The company
announces and allots bonus shares in the ratio of 3:1 on 01.07.2019. After the allotment of bonus shares, the
shares were sold by Maya on 10.03.2020 at Rs. 400 per share and STT was paid on it. Compute the amount of
capital gain/loss in her hands for A.Y. 2020-21.
CII – F.Y. 2018-19: 280; F.Y. 2019-20: 288
a) Long term capital gain of Rs. 7,00,000.

b) Long term capital gain on sale of original shares of Rs. 3,00,000. Short term capital gain on sale of bonus
shares of Rs. 4,00,000.
c) Long term capital of Rs. 6,73,529.
d) Long term capital gain on sale of original shares of Rs. 2,73,529. Short term capital gain on sale of bonus
shares of Rs. 4,00,000.
15. XYZ & Co., a partnership firm, owns a house property which is utilized by the partners for their residence. On
31.10.2019, the firm sells the property at a long-term capital gain of Rs. 3,50,000. Can the firm or partners claim
exemption under section 54?
a) Yes, the firm can claim exemption u/s 54 as the firm has earned long term capital gains from the transfer
of a residential house.
b) Yes, the partners can claim exemption u/s 54 as the property was used by them for residential purpose and
the said property has been indirectly transferred by the partners only in the capacity of a firm.
c) Neither the firm nor the partners can claim deduction u/s 54 as the said deduction is allowed only in case
of a commercial property.
d) The firm cannot claim deduction u/s 54 as deduction under the said section is allowed only to an individual
or HUF. Further, the partners cannot claim deduction u/s 54 as the transferor in the instant case is the
firm.
16. A Ltd. is 100% holding company of B Ltd. A Ltd. transfers a capital asset (acquired in 2002 for Rs. 50,000) on
16.06.2019 for Rs. 3,70,000 to B Ltd. B Ltd. is an Indian company, while A Ltd. is a foreign company. The capital
asset is transferred as stock-in-trade to B Ltd. Determine whether any capital gains shall be chargeable to tax in
the instant case?
a) Any transfer between a holding company and 100% subsidiary company is not treated as a transfer at all.
Hence, no capital gains tax liability shall arise.
b) Any transfer between a holding company and 100% subsidiary company is not treated as a transfer if the
transferee company is an Indian company. Hence, no capital gains tax liability shall arise.
c) A transfer between a holding company and 100% subsidiary company is treated as a “transfer” as there is
no specific exclusion in this regard. Hence, capital gains tax liability shall arise.
d) Any transfer between a holding company and 100% subsidiary company is not treated as a transfer if the
transferee company is an Indian company. However, this rule is not applicable if the capital asset is
transferred as stock-in-trade. Hence, capital gains tax liability shall arise.
17. Mr. Vaibhav sold his old residential house in April, 2018 for Rs. 28,00,000. Long- term capital gain arising on
transfer of old house amounted to Rs. 8,40,000. In December, 2018, he purchased another residential house
worth Rs. 5,00,000. The new house was however, sold in April, 2019 for Rs. 14,00,000 (stamp duty value of the
new house was Rs. 12,00,000). What will be amount of taxable capital gains in the hands of Mr. Vaibhav for the
A.Y. 2019-20 and 2020-21?
a) Long term capital gain of Rs. 3,40,000 in A.Y. 2018-19 and short-term capital gain of Rs. 14,00,000 in A.Y.
2019-20
b) Long term capital gain of Rs. 3,40,000 in A.Y. 2018-19 and long-term capital gain of Rs. 5,00,000 and
short-term capital gain of Rs. 14,00,000 in A.Y. 2019-20
c) Long term capital gain of Rs. 3,40,000 in A.Y. 2018-19 and long-term capital gain of Rs. 5,00,000 and
d) Long term capital gain of Rs. 3,40,000 in A.Y. 2018-19 and long-term capital gain of Rs. 5,00,000 and
18. ABC a partnership firm was dissolved on 1-5-2019. A machine acquired on 1-5-2017 for Rs. 3,50,000 was
distributed amongst the partners on dissolution for Rs. 3,00,000. The value of machinery as per books of
account and Fair Market Value on 1-5-2019 was Rs. 2,50,000 and Rs. 4,00,000, respectively. What will be the
full value of consideration of this machine?
a) Rs. 3,00,000
b) Rs. 4,00,000
c) Rs. 3,50,000
d) Rs. 2,50,000
ICAI RTP and MTPs
19. Ms. Jaya acquires 5,000 equity shares on 01.01.2017 at Rs.500. The Fair Market Value of the said share on
31.01.2018 is Rs. 250 and on 31.03.2019 is Rs. 600. She sells the said shares on 30.04.2019 at Rs.700. Calculate
the amount of long-term capital gain in the hands of Ms. Jaya assuming that Securities Transaction Tax has been
paid by her on acquisition and transfer of the said equity share.
CII – F.Y. 2016-17: 264; F.Y. 2019-20: 289
a. Rs. 10 lakhs, out of which Rs. 9 lakh is taxable@10%

b. Rs. 22.50 lakhs, out of which Rs. 21.5 lakh is taxable@10%
c. Rs. 7.45 lakhs, out of which Rs. 6.45 lakh is taxable @10%
d. Rs. 5 lakhs, out of which Rs. 4 lakh is taxable@10%
20. Neha sold her residential house for Rs. 85 lakhs on 11.08.2019. Value adopted by the Stamp Valuation Authority
on the date of registration of the Conveyance Deed i.e., 17.08.2019 was Rs. 150 lakhs. Neha disputed the
valuation done by the said authority before the Assessing Officer and filed an application before him to refer her
case to the Valuation Officer. The Valuation Officer determined the value of the house on date of registration of
Conveyance Deed at Rs. 160 lakhs. In light of these facts, compute the full value of consideration to be taken in
case of Neha for the purpose of calculation of capital gains in her hands.
a. Rs. 85 lakh
b. Rs. 150 lakh
c. Rs. 160 lakh
d. Rs. 89.25 lakh
21. Suman is a Chartered Accountant practicing in Mumbai since September, 1994. She transfers her practice to
another Chartered Accountant Smita on 19.06.2019 and charges Rs. 14,50,000 towards goodwill. Determine the
tax implications that may arise in the hands of Neha on account of transfer of her practice to Smita.
a. Rs. 14,50,000 shall be charged to tax as capital gains
b. Rs. 14,50,000 shall be charged to tax as income from other sources
c. Rs. 14,50,000 shall be charged to tax as income from profession
d. No tax implications shall arise
22. X. Mr. Rana is a resident of India residing in Meerut. During F.Y. 2010-11 he purchased an agricultural land
situated in Bahadurpur for INR 10 lacs. This land is situated in an area which has aerial distance of 3 km from
the local limits of Municipality of Bahadurpur. Total population of this area is 80,000 as per the last preceding
census. During F.Y. 2019-20, Mr. Rana sold this land to Mr. Jeet for INR 25 lacs on 29.1.2020. Mr. Rana invested
INR 5 lakhs in bonds of NHAI on 31.7.2020. Cost inflation index for F.Y. 2010-11 and F.Y. 2019-20 is 167 and
289 respectively. Compute the amount of capital gain taxable in the hands of Mr. Rana for A.Y. 2020-21:
a. INR 2,69,461
b. INR 7,69,461
c. INR 10,00,000
d. None of the above
MCQs for practice
23. Capital asset means _____________________.
a. Any property (Movable, immovable), connected with assessee’s business or profession

b. Any securities held by FIIs (invested as per SEBI regulations)
c. Any rights in Indian company including right of management or control
d. All of the above
24. Capital asset excludes ______________________.
a. Stock in trade and Consumables stores

b. Movable personal effects
c. Rural agricultural land in India
d. All of the above
25. Mr. Ram purchased a car for his personal use for INR 5,00,000 in April, 2019 and sold the same for INR
5,50,000 in July, 2019. The taxable capital gains would be ____________________.
a. Nil
b. INR 5,50,000
c. INR 50,000
d. INR 4,00,000
26. Which of the following is capital asset?
a. A Maruti dealer holding cars for sale

b. A Maruti dealer has Honda city car for his personal use.
c. Jewellery held by a jeweller which has been held as stock in trade
d. Jewellery held by a jeweller for his personal use.
27. Gold utensils are ________________ and silver utensils are _______________.
a. Capital asset, capital assets

b. Not capital asset, capital asset
c. Capital asset, not capital asset
d. Not capital asset, not capital assets
28. Which of the following assets is long term capital assets?
a. Car used for 5 years for personal purposes before the date of sale
b. Jewellery held for 10 years for personal use before its date of sale
c. House property held by a property dealer for sale for 4 years before sale
d. Shares held by Mr. Ram as investment and sold 11 months after date of purchase
29. Listed securities (except bonds and units) are treated as long term capital asset, if they are held for more than
______ months.
a. 12
b. 6
c. 24
d. 48
30. Unlisted equity shares are treated as long term capital asset, if they are held for more than ____________
months.
a. 12
b. 6
c. 24
d. 48
31. Units of debt-oriented mutual funds are treated as long term capital asset, if they are held for more than
_______ months.
a. 12
b. 36
c. 24
d. 48
32. Zero- coupon bonds are treated as long term capital asset, if they are held for more than _________ months.
a. 12
b. 36
c. 24
d. 48
33. Units of UTI or equity – oriented MF are treated as long term capital asset, if they are held for more than
________ months.
a. 12
b. 36
c. 24
d. 48
34. Securities transaction tax paid by the transferor of shares and units by a person shall ________________.
a. Be allowed as deduction as expenses of transfer

b. Not be allowed as deduction as expenses of transfer
c. From part of cost in case of tangible assets only
d. Form part of cost if assets is purchased before 1.4.2001
35. Cost of acquisition includes _______________.
a. All the expenditure incurred to acquire the asset

b. Revenue expenditure incurred to acquire the asset
c. Only capital expenditure incurred for completing or acquiring title to the property
36. Securities transaction tax paid by the purchaser of shares and unit, not being dealer in shares, shall
________________.
a. Form part of the cost of such shares and units

b. Not form part of the cost of such shares and units
c. Form part of cost in case of tangible assets only
d. Form part of cost if asset is purchased before 1.4.2001
37. No indexation is done in case of ___________.
a. Bonds/ debenture/ zero coupon bonds

b. Slump sale
c. long term capital asset specified u/s 112A
d. All of the above
38. Cost of improvement includes ____________.
a. All the expenditure incurred in making any additions/improvements/ protect capital assets
b. Revenue expenditure incurred in making any additions/ improvement/ protect capital asset
c. Capital expenditure incurred in making any additions /improvements/protect capital asset
39. Cost of improvement shall be indexed if ______________.
a. Improvement is done before 36 months from date of transfer

b. Improvement is done before 24 months from date of transfer
c. Improvement is done before 12 months from date of transfer
d. If the asset is long term capital asset.
40. When can Assessing officer refer valuation officer with a view to ascertain FMV of a capital asset?
a. Where the value of the asset claimed by the Assessee is in accordance with valuation made by the registered
valuer, but Assessing officer is of the opinion that value so claimed is less than FMV of the asset
b. Where the Assessing officer is of the opinion that FMV of the asset exceeds the value claimed by lower of (i)
more than 15% of the value claimed by the Assessee or (ii) INR 25,000
c. Where the Assessing officer thinks that it is necessary to do so having regards to the nature of the asset and
relevant circumstances
d. All of the above
41. Mr. Ram entered into an agreement with Mr. Shyam for sale of a building for INR 20 Lakhs. In June 2019, Mr.
Ram received advance of INR 2 Lakhs. Subsequently the agreement was cancelled and Mr. Ram forfeited the
advance money. The advance money is _________________.
a. To be reduced from the cost of acquisition
b. To be reduced from indexed cost of acquisition

c. Taxable as capital gains
d. Taxable u/h Income from Other Sources.
42. Cost of acquisition of the shares given under ESOP plan shall be ________________.
a. Always taken as nil

b. FMV of the equity shares on the date of issue
c. FMV of equity shares on date of exercising option
d. Price at which it was offered to employee
43. Where a capital asset other than urban agricultural land is compulsorily acquired then the capital gain shall arise
in the previous year in which __________________.
a. Compulsory acquisition took place

b. Full consideration is received
c. Part/full consideration is received
d. Any year at the discretion of the government
44. An interim order in relation to enhanced compensation was passed by court on 10 May, 2019. Amount was also
received in pursuance of order. Compensation so received shall be taxable _______________.
a. When the amount is received

b. When final order of the court is passed
c. Any of the above
45. In case of compulsory acquisition, if an Assessee receives enhanced compensation, then enhanced compensation
is taxable as ________________.
a. STCG
b. LTCG
c. STCG/LTCG depending upon the original capital gain of compulsory acquisition
d. Any kind of capital gains to be decided by the government
46. In case of compulsory acquisition, if enhanced compensation is received, then for purpose of computation of
capital gain, cost of acquisition and cost improvement in that case shall be taken as ___________.
a. Always taken to be nil

b. Cost of acquisition or cost of improvement which was in excess of initial compensation earlier received
c. Any amount of cost decided by the government
d. Any amount of cost decided by the Assessee
47. Mr. Ram, while computing capital gain on enhanced compensation, deducted litigation expense incurred by
him. Assessing officer contended that litigation expenses are non-deductible. Is contention of Assessing officer
valid?
a. Valid
b. Invalid
c. Partially invalid
48. Mr. Ram has received a sum of INR 3,40,000 as interest on enhanced compensation for compulsory acquisition
of land by state government in May 2019. Of this, only INR 12,000 pertains to the current year and the rest
pertains to earlier years. The taxable interest for PY 2019-20 would be ______________.
a. INR 12,000
b. INR 6,000
c. INR 3,40,000
d. INR 1,70,000
49. In case of specified agreement u/s 45(5A), sale consideration shall be ________________.
a. FMV of the asset given up

b. Actual cost of the asset given up
c. Stamp duty value of the share (being land or building or both) in the project on the date of issue of certificate
of completion + consideration received in cash
d. Assessing officer will decide
50. Benefit u/s 45(5A) is not available if Assessee transfers his share in the project to any person ___________.
a. Before 1.4.2001
b. Before 1.4.2020
c. On/before issue of completion certificate
d. Always available
51. Cost of improvement of tenancy rights, route permits or loom hours shall be _____________.
a. It is always taken as Nil

b. Always considered irrespective of period when it was incurred
c. Considered when incurred on or after 1.4.2001
d. Considered when incurred before 1.4.2001
52. If the bonus shares are acquired before 1.4.2001, the cost of acquisition of such bonus share shall be ______.
a. Cost for which it was acquired by the Assessee

b. FMV as on 1.4.2001
c. Always taken as nil
d. Higher of (a) or (b)
53. If the bonus shares are acquired on or after 1.4.2001, the cost of acquisition of such bonus share shall be
___________________.
a. Cost for which it was acquired by the Assessee
b. FMV as on 1.4.2001
c. Always taken as nil
d. Higher of (a) or (b)
54. Cost of acquisition of right shares to existing shareholders shall be __________________.
a. Market value of right share are offered

b. Price at which these shares are offered
c. Price at which shares are offered plus the amount paid to the person renouncing the right
d. Always taken as Nil
55. Cost of acquisition of right shares to a person who purchased right to acquire share from the exiting shareholder
shall be __________________.
a. Market value of right share are offered

c. Price at which these shares are offered + amount paid to the person renouncing the right
56. Cost of acquisition of the right to the existing shareholder shall be ___________________.
a. Market value of right shares being offered

c. Price at which these shares are offered + the amount paid to the person renouncing the right
57. In case of sale of right, _______________ will always arise.
a. STCG
b. LTCG
c. STCG/LTCG depending on period of holding
d. No capital gain will arise.
58. Mr. Ram owns two machineries in the block of assets which is depreciable at the rate of 15%. The WDV of the
block as on 1.4.2019 was INR 65,000. No other asset was acquired during the year. One of these machines was
sold during the previous year for INR 75,000. Compute Capital Gain.
a. STCG of INR 10,000 in hands of Mr. Ram

b. STCL of INR 10,000 in hands of Mr. Ram
c. LTCG of INR 10,000 in hands of Mr. Ram
d. No capital gain as depreciation would be allowed on one of the machines left with Mr. Ram
59. Capital gain in case of slump sale would be _________________.
a. LTCG, if the undertaking/ division transferred is held for more than 36 months
b. LTCG, if the undertaking/ division transferred is held for more than 24 months
c. LTCG, if the undertaking/ division transferred is held for more than 24 months
d. STCG, irrespective of the period of holding
60. Period of holding in case of shares held in a company in liquidation shall ___________ the period subsequent
to the date of liquidation.
a. Include
b. Exclude
c. Depends on Assessing officer
61. Distribution of assets at the time of partition of HUF shall _________________.
a. be regarded as a transfer in the hand of HUF

b. be regarded as a transfer in the hands of family members
c. not be regarded as transfer in the hands of HUF
d. not be regarded as a transfer in hands of family members.
62. For claiming exemption u/s 54B, the new agricultural land should be purchased ______________.
a. Within 3 years from the date of transfer

b. Within 2 years from the date of transfer
c. Within 2 years from the end of the relevant PY
d. Within 3 years from the end of the relevant PY
63. Which of the following transactions are not regarded as transfer?
a. Transfer of rupee denominated bond of Indian company issued outside India by NR to another NR [section
47(viiaa)]
b. Redemption of Sovereign Gold Bonds by individual issued under Sovereign Gold Bond Scheme 2015 [section
47 (viic)]
c. Conversion of preference shares into equity shares: any transfer by way of conversion of preference shares of
a company into equity shares of that company [sec 47(xb)]
d. All of the above
64. Any lumpsum amounts or instalments received as a loan under a scheme of reverse mortgage from the bank by
senior citizen is ________________.
a. Exempt u/s 10(43)

b. Taxable
c. Exempt u/s 10(38)
d. Exempt upto INR 2.5 lakhs
65. For claiming exemption u/s 10(37), urban agricultural land is used for __________ by HUF or individual or a
parent of individual during the period the period of ____________ immediately preceding date of transfer.
a. Any purpose, three year

b. Agricultural purpose, three years
c. Agricultural purpose, 2 years

d. Business purpose, two years
66. For claiming exemption u/s 54, the Assessee should purchase residential property within ____________.
a. 2 years after the date of transfer

b. 3 years after the date of transfer
c. Within 1 year before or 2 years after the date of transfer
d. 1 year before and 3 years after the date of transfer
67. For claiming exemption u/s 54, Assessee should complete construction of residential property _________.
a. Within 1 year before or 2 years after the date of transfer

b. With 1 year before or 3 years after the date of transfer
c. Within three years after the date of transfer
d. Within two years after the date of transfer
68. The exemption u/s 54 shall be available _______________.
a. To the extent of capital gain invested in the residential house property

b. Proportionate to the net sale consideration invested in the residential house property
c. To the extent of amount actually invested in the residential house property
d. To the extent of amount of net sale consideration invested in the residential house property
69. The new house purchased/constructed for which exemption was claimed u/s 54 should not be transferred within
3 years _______________________.
a. From the date of transfer of original house

b. From the date of purchase/construction of new house
c. From the end of PY when such new house was acquired
d. From the end of PY in which old house was transferred
70. If a new house property for which exemption was claimed u/s 54 is transferred within 3 years
_____________.
a. Capital gain exempt u/s 54 earlier shall be separately taxable as capital gains
b. The entire capital gain on new transfer shall be taxable
c. Capital gain exempt u/s 54 earlier shall be reduced from cost of acquisition of new house property
d. Capital gain exempt u/s 54 earlier shall be added to the cost of acquisition of new house property
71. Residential house is sold for INR 90 Lakhs and the LTCG’s computed are INR 50 Lakhs. The assesses bought
two residential houses for INR 30 Lakhs and INR 20 Lakhs respectively. The amount eligible for exemption u/s
54 would be ____________ Lakhs.
a. INR 50
b. INR 20
c. INR 30
d. Nil
72. For claiming exemption u/s 54B, the capital asset transferred should be _______________.
a. Urban agricultural land

b. Rural agricultural land
c. Any of (a) or (b)
d. None of (a) or (b)
73. For claiming exemption u/s 54D the Assessee should purchase and or construct another land and building within
_____________.
a. 3 years from the date of compulsory acquisition

b. 3 years from the date of receipt of compensation
c. Within 3 years from the end of the previous year in which compulsory acquisition took place
d. Within 2 years from the end of the previous year in which compulsory acquisition took place
74. If new agricultural land purchased from which exemption was claimed u/s 54B is transferred within 3 years then
________________________.
a. Capital gain exempt u/s 54B earlier shall be separately taxable as capital gains
b. The entire capital gain on new transfer shall be taxable
c. Capital gain exempt u/s 54B earlier shall be reduced from the cost of acquisition of new agricultural land
d. Capital gain exempt u/s 54B earlier shall be added to the cost of acquisition of new agricultural land
75. Exemption u/s 54EC shall be available to ___________________.
a. Any Assessee
b. Individual only
c. Company Assessee only
d. HUF only
76. Exemption u/s 54EC shall be available for Transfer of ___________________.
a. Any long-term capital asset

b. Residential house property
c. Land or building or both
d. Any long-term capital asset other than residential house property
77. For section 54EC, capital gain account scheme is ________________________.
a. Applicable
b. Not applicable
c. Applicable with the approval of the government
d. Applicable or not at the discretion of the Assessee
78. For claiming exemption u/s 54EC, an Assessee has to invest the resultant capital gains within a specified period.
Bonds of which of the following is not eligible for such investment?
a. NHAI Ltd
b. RECL Ltd
c. PFC Ltd
d. NABARD
79. LTCG on 15th Oct 2019 is INR 105 Lakhs. Assessee invested INR 50 Lakhs in RECL bonds on 31st March 2020
and INR 55 Lakhs in NHAI bonds on 18th May 2020. Exemption eligible u/s 54EC is ________________.
a. Nil
b. INR 50 Lakhs
c. INR 55 Lakhs
d. INR 105 Lakhs
80. Exemption u/s 54F is available if the asset transferred is _____________________.
a. long term capital asset other than residential house property

b. long term capital asset including residential House property
c. Short term capital asset other than residential house property
d. Short term capital asset including residential house property
81. Exemption u/s 54F is available ______________________.
a. To the extent of amount invested

b. Proportionate to the net sale consideration so invested
c. Both (a) & (b)
82. Exemption u/s 54F shall not be allowed if the Assessee on the date of transfer owns _____________.
a. Any residential house

b. A residential house which is let out
c. A house which is self-occupied
d. More than one residential house
83. Amount unutilized in capital gain scheme for which exemption u/s 54B was claimed shall be treated as _____.
a. LTCG
b. STCG
c. STCG or LTCG depending upon the original capital gain
d. Any kind of capital gains as per wish of the Assessee
84. Amount unutilized in the capital gain scheme which was deposited for construction of house property, for which
exemption was claimed u/s 54 is treated a LTCG of PY in which period of ______________.
a. 2 years has expired from date of deposit

b. 2 years has expired from date of transfer
c. 3 years has expired from date of deposit
d. 3 years has expired from date of transfer
85. In case of compulsory acquisition, the period for investment in specified assets u/s 54, 54B, 54D and 54F shall
be reckoned from ________________.
a. The date of transfer

b. The date when the part or full compensation is received
c. The date as and when compulsory acquisition is done
d. From the date as when Assessee desires
86. Where the total income of an Assessee includes income by way of LTCG arising from transfer of listed securities
(other than listed equity shares) applicable income tax rate on such income is _____________.
a. 20% of LTCG calculated after doing indexation

b. 10% of LTCG calculated without doing indexation
c. Higher of (a) or (b)
d. Lower of (a) or (b)
87. Mr. Ram purchased shares of GCC Pvt. Ltd. for INR 5 Lakhs on 3rd April 2018. The shares were sold on 5th June,
2019 for INR 7 Lakhs. She paid STT of INR 700 and brokerage of INR 500. The amount chargeable to tax is
________________.
a. INR 2,00,000
b. Nil
c. INR 1,99,500
d. INR 1,98,700
88. Mr. Ram purchased 100 listed equity shares of Reliance Industries Limited for INR 300 each on 15.4.2019. On
15.3.2020, he had sold all the shares for INR 410 each and brokerage paid has been 1%. Capital Gain for PY
2019-20 shall be _______________________.
a. LTCG of INR 10,590

b. STCG of INR 10,590
c. LTCG of INR 41,000
d. STCG of INR 1,000
89. Which of the following shall be treated as Transfer?
a. Conversion of capital asset into stock-in trade

b. The relinquishment of the asset
c. The extinguishment of any rights/asset
d. All of the above
90. Statement 1: Compensation paid for eviction if hutment dwellers from Land shall be treated as Cost of
improvement.
Statement 2: Benefit of rebate under section 87A is allowed against LTCG taxable under section 122 as well as
112A.
a) Only Statement (1) is correct

b) Only Statement (2) is correct
c) Both the Statements are correct
d) None of the Statements is correct
91. Statement 1: Section 50CA is applicable in case of transfer of unlisted shares or listed shares sold privately.
Statement 2: Under section 54EC, bonds should not be transferred or converted into cash within a period of 3
years, else exemption earlier allowed shall be considered to be long term capital gains of the year in which such
asset was transferred on converted into cash.

92. Statement 1: Under slump sale, while computing net worth, revaluation of asset shall be ignored.
Statement 2: As per section 50B, net worth shall be the aggregate value of total assets of the undertaking or
division as reduced by the value of liabilities of such undertaking or division as appearing in its books of account.

93. Statement 1: As per section 50B, while calculating net worth, in case of depreciable asset, their WDV shall be
taken into consideration while for other non-depreciable assets, their book value shall be taken into
consideration.
Statement 2: In case of transfer of new residential house property purchased within 3 years, amount of capital
gains exempted earlier taxable as LTCG in the PY in which new property sold.

94. Statement 1: Where total income (excluding income under section 111A and 112A) exceeds INR 2 crore but
does not exceed INR 5 crore, the rate of surcharge on the income-tax payable on the portion of income
chargeable to tax under section 111A and 112A shall be 25%.
Statement 2: Where total income (excluding income under section 111A and 112A) exceeds INR 2 crore but
does not exceed INR 5 crore, the rate of surcharge on the income-tax payable on the portion of income
excluding income under section 111A and 112A shall be 15%.

95. Statement 1: Where total income (including income under section 111A and 112A) exceeds INR 1 crore but does
not exceed INR 2 crore, Surcharge on the income-tax payable on the portion of income chargeable to tax under
section 111A and 112A shall be levied @ 15% on income-tax.
Statement 2: Where total income (including income under section 111A and 112A) exceeds INR 1 crore but
does not exceed INR 2 crore, Surcharge on the income-tax payable on the portion of income excluding income
chargeable to tax under section 111A and 112A shall be levied @ 15% on income-tax.

96. Statement 1: Where total income (excluding income under section 111A and 112A) exceeds INR 5 crore, Rate
of surcharge on the income-tax payable on the portion of income chargeable to tax under section 111A and 112A
shall be levied @ 15% on income-tax.
Statement 2: Where total income (excluding income under section 111A and 112A) exceeds INR 5 crore, Rate
of surcharge on the income-tax payable on the portion of income excluding income chargeable to tax under
section 111A and 112A shall be levied @ 37% on income-tax.

Answer Key
1. D 2. C 3. B 4. B 5. D 6. C 7. C
8. C 9. C 10. A 11. A 12. D 13. A 14. B
15. D 16. D 17. A 18. B 19. A 20. B 21. D
22. B 23. D 24. D 25. A 26. D 27. C 28. B
29. A 30. C 31. B 32. A 33. A 34. B 35. C
36. B 37. D 38. C 39. D 40. D 41. D 42. C
43. C 44. B 45. C 46. A 47. B 48. D 49. C
50. C 51. A 52. D 53. C 54. C 55. C 56. D
57. A 58. A 59. A 60. B 61. C 62. B 63. D
64. A 65. C 66. C 67. C 68. A 69. B 70. C
71. A 72 A 73. B 74. C 75. A 76. C 77. B
78. D 79. B 80. A 81. B 82. D 83. A 84. D
85. B 86. D 87. C 88. B 89. D 90. A 91. D
92. C 93. A 94. D 95. C 96. C

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CA Kishan Kumar MCQs – Capital gain May/Nov 2020

ICAI Study Material MCQs

1. Which of the following would be regarded as transfer?

a) transfer of a capital asset in a scheme of reverse mortgage

a) at the rate of 10%

3. Distribution of assets at the time of liquidation of a company ________________________.

a) is not a transfer in the hands of the company or the shareholders.

4. Land or building would be long-term capital asset only if it is __________________.

5. Capital gain on transfer of depreciable asset would be ________________.

a) long term capital gain, if held for more than 36 months

d) Capital gains is taxable at concessional rate of 15%.

a) The market value of the capital asset on the date of transfer

9. Under section 54F, capital gains are exempted if _____________________.

a) within a period of 6 months from the date of transfer of the asset

ICAI Sample MCQs

a) Rs. 4 lakhs in P.Y. 2019-20

a) Only LTCG taxable @ 20%

a) Long term capital gain of Rs. 7,00,000.

ICAI RTP and MTPs

CII – F.Y. 2016-17: 264; F.Y. 2019-20: 289

a. Rs. 10 lakhs, out of which Rs. 9 lakh is taxable@10%

d. None of the above

MCQs for practice

23. Capital asset means _____________________.

a. Any property (Movable, immovable), connected with assessee’s business or profession

24. Capital asset excludes ______________________.

a. Stock in trade and Consumables stores

26. Which of the following is capital asset?

a. A Maruti dealer holding cars for sale

a. Capital asset, capital assets

28. Which of the following assets is long term capital assets?

a. Be allowed as deduction as expenses of transfer

35. Cost of acquisition includes _______________.

a. All the expenditure incurred to acquire the asset

a. Form part of the cost of such shares and units

37. No indexation is done in case of ___________.

a. Bonds/ debenture/ zero coupon bonds

38. Cost of improvement includes ____________.

39. Cost of improvement shall be indexed if ______________.

a. Improvement is done before 36 months from date of transfer

a. To be reduced from the cost of acquisition

b. To be reduced from indexed cost of acquisition

a. Always taken as nil

a. Compulsory acquisition took place

a. When the amount is received

a. Always taken to be nil

a. FMV of the asset given up

a. It is always taken as Nil

a. Cost for which it was acquired by the Assessee

a. Cost for which it was acquired by the Assessee

54. Cost of acquisition of right shares to existing shareholders shall be __________________.

a. Market value of right share are offered

a. Market value of right share are offered

a. Market value of right shares being offered

57. In case of sale of right, _______________ will always arise.

a. STCG of INR 10,000 in hands of Mr. Ram

59. Capital gain in case of slump sale would be _________________.

d. STCG, irrespective of the period of holding

61. Distribution of assets at the time of partition of HUF shall _________________.